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With guest host Tom Gjelten.
Republicans in Congress are set to iron out differences in their tax plans, near the end of the road before the bill can become a law. Cutting the corporate tax rate to 20 percent will save businesses some $1 trillion as one version of the plan ends tax breaks on graduate student tuition waivers. We discuss.
You reduce the corporate tax, you get higher investment, higher productivity and better wages.Gordon Gray, American Action Forum
Sahil Kapur of Bloomberg News tells us that the competing House and Senate versions are "riddled with glitches" that have to be worked out before they can become law.
Gordon Gray of the American Action Forum told us there's a "strong consensus" that the corporate taxes currently inhibit investment.
"That’s one of the fundamental tenets of this part of the tax reform — you reduce the corporate tax, you get higher investment, higher productivity and better wages," Gray says.
Steven Rosenthal, a senior fellow at the Urban-Brookings Tax Policy Center, says if he had his druthers he'd cut corporate taxes too, but not the way Congress wants to do it.
"There still will be an incentive for U.S. companies to shift jobs, factories and profits offshore," Rosenthal said, despite promises that there would be "guardrails" in the plan.
We also heard from graduate students, who might lose tax benefits for their tuition. That proposal is in the House bill, but not the Senate version. Eric Kelderman of the Chronicle of Higher Education says the proposal faces grim prospects, with heavy opposition on campuses and in the Senate.
Steven Rosenthal, senior fellow, Urban-Brookings Tax Policy Center.
From The Reading List:
Chronicle of Higher Education: How The House GOP Tax Plan Would Affect Grad Students — "The Republican-sponsored bill contains a provision that would tax tuition waivers provided to employees of colleges, including those graduate students. The waivers serve as a significant benefit to student workers who otherwise would not be able to afford to pay tuition on what is often meager pay from their institutions."
TaxNotes.com: Slashing Corporate Taxes: Foreign Investors Are Surprise Winners —A cut in the corporate tax rate would benefit the current owners of U.S. corporate equity. I estimate that foreign investors own about 35 percent of U.S. corporate stock and thus would receive about 35 percent of the short-run benefit.
American Action Forum: What To Make Of The Joint Committee On Taxation Score —The JCT’s dynamic score offers no great surprise. It doesn’t repudiate serious arguments in favor of the bill, nor does it do the bills’ fiercest advocates any great favors. Rather, it offers observers another useful, albeit hardly dispositive, reference point for evaluating tax legislation.
Bloomberg: The Middle Class Might Not Even Notice If The GOP Cuts Their Taxes — "A funny thing happened when Congress approved a tax cut for the middle class eight years ago: Most Americans didn’t notice.
The 2009 economic-stimulus bill contained a one-year tax break worth $800 for married couples in 95 percent of working households — a little over $15 a week. A February 2010 poll found that just 12 percent said their taxes had been reduced. More than half, 53 percent, said they saw no change. A remarkable 24 percent thought their taxes had increased."
The tax bill that Republicans hope to finish before Christmas offers relief to the middle class through lower rates and more deductions; but the biggest selling point is lower corporate rates. Cutting business taxes should boost investment; that’d mean more growth and more jobs. But graduate students could face a tax increase. Up next, On Point: a look at what the tax changes would mean — for the economy, for working Americans, and for students. --Tom Gjelten
This program aired on December 12, 2017.
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